Collecting user information to serve tailored ads is all too common, but InMobi did so through deception, the FTC alleged. The company stated it would only collect the location-based data if given permission, however, InMobi secretly collected it anyway, the agency said.

InMobi also created a database that could guess a user’s whereabouts, even when the location-tracking function had been shut off, the FTC said.

The company also allegedly tracked the locations of children, when promising not to do so. A U.S. privacy regulation requires companies collecting information about children to first gain the consent from their parents.

InMobi

Mobile advertising from InMobi

“The case is the FTC’s first charging a mobile ad company with deception and with violating the Children’s Online Privacy Protection Act,” the agency said in a blog post.

InMobi has agreed to a settlement and will pay a US$950,000 fine. The company blamed a “technical error” for serving children with the targeted advertising.

In no way was this “deliberate,” and the company notified the FTC as soon as the problem was discovered, InMobi said in an email.

It also said that the company was only tracking users’ location without their permission in “certain instances.” The problems were corrected in last year’s fourth quarter, InMobi added.

As part of the settlement, InMobi must delete all the information it illegally collected and operate a privacy program for the next 20 years to keep the company in line with regulations. It must also honor the user's location privacy settings.